Full Employment in Europe

Full Employment in Europe

Managing Labour Market Transitions and Risks

Günther Schmid

Transitional Labour Markets (TLM) – defined as legitimate, negotiated and politically supported sets of various employment options in critical events over the life course – are an essential ingredient of modern full employment strategies. After assessing the European Employment Strategy, this book offers a detailed comparative analysis of employment performance for selected European member states and the United States. It suggests that successful employment systems arise from a new paradigm of flexibility and security (‘flexicurity’) the balance of which varies according to countries’ institutional paths. Whilst there is no ‘best practice’, TLM theory does provide normative and analytical principles that can be generalised for various institutional settings. The book also provides good practice examples for managing critical transitions over the life course – from education to employment, from one job to another, from unemployment to employment, from private activities to gainful work and from employment to retirement – and develops the contours for extending unemployment insurance to work–life insurance.

Chapter 7: New Forms of Governance in Labour Market Policy: Are there any Limits to Privatisation?

Günther Schmid

Subjects: economics and finance, labour economics, social policy and sociology, labour policy


We have enough bread. We need laws! (Chinese students protesting in Tiananmen, Beijing, June 1989) ‘Activating’ the unemployed and ‘privatising’ public employment services are often thought of as panaceas for the difficulties of achieving full employment. The intention of this chapter is to give these concepts analytical foundations and to highlight related dangers and limits. I argue that the negligence of implementation failure explains many of the disappointing results of studies evaluating active labour market policy (ALMP). Only their systematic consideration improves the effectiveness of ALMP. Failure of proper targeting is another reason for the poor effects of many labour market programmes. Acknowledgement of this failure leads to the suggestion of directing labour market policy towards transitional labour markets. Two facts in particular bear on this area of policy. First, people wish to move during their life course between various forms of productive activities of which gainful employment may be the most important alternative, but not the only one. Second, people have to change jobs or their occupation and skills during their life course. If one accepts these two facts, then labour market policy in Europe must target a larger opportunity set of activities. Firms, too, have an interest in ‘breathing’ with respect to their workforce. As mentioned in preceding chapters, the goals of making work pay and making transitions pay should guide modern labour market policy. However, the original meaning of activation – individual empowerment – is often reversed; it comes to signify a repressive workfare strategy. And...

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